There have long been those who believe the world's woes are undeniably linked to capitalism's faults. There's an appreciation of capitalism's role in advancing healthcare, food production, transportation, and other aspects that improve the 21st century's quality of life. Critics maintain the capitalistic approach is inherently exploitative, unstable and unsustainable.
In 2020, a growing chorus of voices declared that systematic integration in business operations was essential and that stewardship of intangible assets, including people and data, was crucial for value creation.
The predictable recoiling from this concept was fierce. Most corporate boards and institutional investors acknowledged that ESG principles were in the long-term interests of principal stakeholders and shareholders.
Today, a more sustainable and responsible form of capitalism known as eco-capitalism has emerged, but it comes with a caveat. The dilemma for most businesses remains the same as it was twenty years ago: money and growth still drive the capitalistic approach, but companies want to be “green” — or at least perceived that way.
Despite current stringent governmental ESG regulations and widespread adoption of “green” technologies that help reduce waste and pollution, over-production and over-consumption continue their relentless advance in the name of economic growth. This has led to a growing backlash and questioning of the true purposes of ESG regulations and if they're genuinely beneficial to society.
Why did this happen?
Capitalism has provided much for human welfare and prosperity, but it's far from perfect. By the early 2020s, its shortcomings had become ever more apparent, with a post-pandemic population expressing discontent with a system prioritizing short-term profits for individuals while harming society's long-term well-being.
Today, most companies have adopted their own forms of eco or green capitalism, with many implementing cost-cutting measures in manufacturing, energy consumption, packaging, and transportation. Yet questions remain over whether these policies are truly beneficial to society. For instance, if increasing production and consumption aren't even considered essential sustainability goals, is it possible for renewable energy sources, lab-grown foods, and other initiatives like hybrid working models to have a significant impact?
Although much progress has been made in using new technologies and business models to increase resource and production efficiencies, people want companies to also focus on reducing expansion, a concept that's still fundamentally contrary to capitalism's principles. So, while manufacturers embrace green initiatives like emissions reduction, continued production and consumption growth mean they aren't sufficient to combat global issues like climate change.
Despite governmental efforts and companies saying they value environmental stewardship regarding climate change, water, and biodiversity, a temperature rise of 1.5C continues to be seen in 2040.
Is a responsible and sustainable version of capitalism possible? In 2040, it appears it remains an inherently irrational system that insists on pursuing expansion and profit to the exclusion of all other societal considerations. The predicted ecological disasters of the 2020s and 2030s, including wildfires, storms, and droughts, led to widespread humanitarian crises and economic damages that continue to this day.
There's now growing public support for an eco-socialist system that supporters, including traditional left-wing political parties, say counters the inefficiencies of eco-capitalism. Their stated goal is to dismantle corporate interests that claim to be eco-capitalistic but continue their quest for greater production and profitability.
In the meantime, the quandary created by developing economies that continue with the capitalist model and eschew green technologies and ESG regulations remains. However, professionals say there will inevitably come the day when all natural and social capital has been extracted and these capitalistic economies will likely no longer be sustainable. When that day arrives remains to be seen.
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